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Top 7 Auto Loan Myths

Maybe you’ve heard something about car loans from a friend of a friend – before you trust that information, it’s a good idea to research it on your own. Research takes time, though. With that in mind, here are the top seven auto loan myths debunked.

Full Price

You don’t have to get an auto loan for the full price of the car. In reality, paying a large down payment on the vehicle you want to purchase can go a long way in making it easier to get the car loan and reducing the overall price you pay for the vehicle.

Used Cars

It’s not more difficult to get an auto loan for a used or pre-owned vehicle. The car dealerships and the banks know the value of a vehicle – even the used ones. As long as you know the true value of the vehicle, being a used vehicle doesn’t factor into getting a car loan.

Perfect Credit

While it’s helpful, you don’t need “perfect credit” (a credit score of 750) to get an auto loan. If you have less than perfect credit (along with the majority of the country), there are things you can do to help you get a car loan, but it’s not impossible.

Refinancing

Like your home, if better opportunities come along, you can refinance your auto loan. You’ll want to make sure you’re getting a better deal if you refinance, but it’s a good idea to look into this if you already have a car loan with a high interest rate.

Homeowners

You don’t have to own your own home to qualify for an auto loan. While having paid off a mortgage or having a good track record at paying a mortgage can go a long way in helping your overall credit score, which would increase your chances of getting a good car loan, you don’t have to own property to get an auto loan.

Down Payment

If someone has told you that you can use your auto loan to pay the down payment on your vehicle, they’re wrong. A down payment is cash that you bring to apply to the total purchase price of the vehicle. The bigger down payment you can come up with, the better your chances of securing an auto loan.

Multiple Loans

As long as your credit score is good (and sometimes even if it’s not) you can get multiple car loans at the same time. You’ll want to make sure you keep up with all your payments and don’t fall behind, but there’s nothing stopping you from applying for more than one auto loan at a time.